Sunday, December 4, 2016

Your Companies Gotta Be Free If They're Going To Lead!!

Nicolas D. Kondratieff, a Russian economist, studied historical commodity prices in the 1920s. He found that there existed long economic cycles in capitalist nations that evolved and self-corrected, which was in sharp contrast to the Marxist notion that capitalism would be its own doom. He died in a Siberian concentration camp in 1938.

Kondtratieff's "wave cycles" are attributed by many to ebbing and flowing gains in innovation and productivity. And they conclude that the nations that excel in such are, without exception, the global leaders.

Sadly, a politician can greatly hinder his/her nations' industries' wherewithal to innovate and, thus, achieve gains in productivity, by dictating to them how and where they'll produce their goods, and, at the extreme (in that it hinders both producer and consumer), by imposing taxes onto the consumers of the goods produced by those whom he/she doesn't favor.

The mantra of conservatives who understand the utter perniciousness of protectionism is that Trump's too smart for that, he won't go there. Or, he'll surround himself with good people whom he'll listen to. The first week or two after the election I was encouraged, not so much lately.

Here's Charles Kirkpatrick and Julie Dahlquist highlighting Modelski's and Thompson's work on the Kondratieff Wave Theory (emphasis mine):
George Modelski and William Thompson have written extensively on the topic. In their book Leading Sectors and World Powers: The Coevolution of Global Economics and Politics, Modelski and Thompson point to the following important aspects of the K-wave theory:
 • Waves are attributes of the world economy led by a major national economy.
 • Waves concern output rather than prices— sector output surges rather than general macroeconomic performance.
 • Waves unfold as phased processes, implying an S-shaped growth curve sequence rather than mechanical and precise periodic cycles.
 • Waves arise from bunching of innovations in product, services, technology, methods of production, new markets, new sources of raw materials, and new forms of business organization (from Schumpeter). This innovation spurt comes from earlier economic slowdown, and its predominant innovative character can identify each wave.
• Each K-wave has its characteristic location— cotton in Manchester, Great Britain, or technology in Orange County, California— and a clear location in time that can be dated. World systems theorists can now date the theory back 19 separate waves to Sung China, more than a thousand years ago.
• Each K-wave affects the structure of the world economy into the future. • The long start-up of a K-wave is often accompanied by a major war.
A significant relationship exists between the K-wave and the rise and fall of world powers. A new K-wave in a new and different location suggests the next location for global leadership. The K-wave grows out of necessity and innovation and then influences global power and politics as they evolve to accept the new economics.

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